Business Expenses for a business I no longer own

[rob0225]

In 2009 we closed our business (LLC filing as S Corp), however I am still paying on a business loan that I personally guaranteed. How do I take that deduction? Last year (2010) was the last year we had income to file a business return and the business no longer exists. Since I no longer have a business to file a business return on, I'm trying to figure out how I document that expense on my personal taxes. Also, am I only allowed to deduct the interest or both principal and interest?

Thanks,

Robert

[Evan]

Most likely none of it is really deductible. Let's say you ran up $25K in credit card debt in 2008, and another $25K in 2009 before closing. That $50K was used to pay expenses, etc., which were all deducted in those respective years.

Seeing as the business closed and you're no longer being reimbursed for interest expense, your only possible deduction is unreimbursed business expenses (potentially) which means you need to: a) itemize your deductions; and b) determine the amount that is deductible, as it must exceed 2% of your AGI.

Even then it would most likely be denied, as it will probably be viewed as personal interest, which is not an allowable deduction.